UK Pound Collapse 47.99 against the Baht

[Abrak]

Well as I see it the Thai bt. is just on a bit of a fluke run as Thailand has a good fiscal position currently and is protected from shorting. It seems to be pegged to the dollar in some way too. Long term it will fall IMHO.

Actually I know someone who is shorting the baht to the tune over US$70bn and it hasnt been going too well recently. So I think she would appreciate your view that it is a good long term bet. Just send it to K.Tarisa at the Bank of Thailand.

[Abrak]

The first part was good, and indeed too much is made of its foregn reserves and generallly strong short term position, too little made of all its problems. After that what you said was just a lot of hot air!

Before criticising minor points about the Thai economy, I think everyone should accept that the bar for being a decent economy is exceptionally low. I mean 'generally strong short term position might be appropriate in a world of disciplined and responsible economies but in terms of todays economies I think shall we say 'exceptionally strong short term position' is really more appropriate when you consider there is no particular underlying problems and an overall surplus (not many of those.)

And given all the crappy currencies around to refer to the Thai baht as the most overvalued currency in the world is really a bit much when you consider that many currencies are hardly worth the paper they are written on. To talk about Thailand not being competitive when it has a current account surplus and forex as a percentage of GDP bigger than China. To say that doesnt matter is fine but at least they didnt have to get bailed out by the Fed like the BoE. And I defy anyone to show anything other than the currency is undervalued on a PPP basis

And to say their fundamentals will deteriorate is almost certainly true because their currency will probably appreciate against the remains of the rubbish out there. The current account may only balance and the fiscal deficit might be 5% but although it will lose competitiveness it is hard to imagine it getting into the trouble of most countries out there.

And when we talk competitiveness it does generate US$180bn exports in a US$260bn economy

The Greek economy which is say US$350bn produces a grand total of US$29bn of exports with imports of US$94bn.Try working with those numbers and workout how it is even an economy.

Ultimately if you are genuinely honest it really difficult to think of a country that has done better than Thailand during the economic crisis. No bank collapse, surpluses, modest fiscal deficit etc. they didnt go about boosting lending by US$1trillion like China. And all the fifth world stuff is really a little much when the first world acted like banana republics. Because they dont have capital controls which allows China to constantly undervalue its exchange rate it is appreciating to its detriment. At least accept they have done a pretty good job during these difficult times and the way economics works (unless you are China) is that competitors who have more problems are made more competitive.

In the fourth quarter if you had measured economic growth in the same way as the US looks at it which QOQ annualized it was 15.3%. Somehow to not even acknowledge their success because you dont appreciate it while throwing meaningless misinformed criticism seems very tough especially set against all the crap out there.

Lovelomsak opening sentence was spot on, concise and clear.

Edited March 10, 2010 by Abrak

[whichschool]

OK as the pounds so low and this is a Thai webste where there must be a fair few earning decent money in Thai Baht or other currencies, it would seem now is as good a time as any to invest in the UK, as im sure even the biggest pessimist must accept the UK will get out of this mess eventually.

All my sterling will be getting invested in nice boring safe investments in the UK shortly, not worth putting it into Euros, dollar or baht investments at present, wouldnt have thought im the only one thinking this way ... surely this will be to the benefit of the UK economy.

Well No! that is the thing here, there are a significant number of people who genuinely think the recession will never end, or a few others who think that the balance of power has shifted from Europe/N. America to Asia.

I think they are on a loser but there you go!

Fair play, but you seem to flood this forum with posts against the pound, can you confirm youve made a shed loads of money doing just this or is it just thoughts that come from reading and watching the same crap as us all that you get your visions from ... as if so i could have gone all against the pound 18 months ago by just stating the <deleted> obvious.

PS You make yourself look silly by saying this recession will never end ... then backtracking with you statement about the balance of power shifting, come on this has been shifting for a good few years now, even during the boom of the last 12 years ... the free thinkers cant take credit for this!

[thaibeachlovers]

So when I think about Thailands baht, I mostly think of exports. Since this economy is mostly made up of exports, around 60 or so percent depending on who you ask, and slightly made up of tourism, the relative strength of the baht is of fundamental importance in the long term prosperity of the country.

Your post was informative, but I have deleted a large part for simplicity .

Anyway, my 5 cents worth.

I'm presuming that most expats living in LOS, are like myself, wanting to live there because they like the place better than wherever they originated, and would have moved there while the real value of their own currencies was significantly higher than the baht, irrespective of the figures, ie, does the exchanged currency provide a liveable income? Whether the baht exchanged at 31 to the pound in 1975 or whenever is irrelevant. To simplify, how many Big Macs would 1 exchanged pound have bought in 1975 compared to today.

If, as I believe, you can buy a lot less in real terms with your exchanged currency now, it must sooner or later have an effect on tourism.

As for expats, if not one of the lucky ones earning the big bahts in Thailand, like myself, if real value of the exchanged pound continues to decrease, there will inevitably come a time when it is financially impossible to live long term in LOS.

While it is true to say that ( official statistics ) tourism is a small part of the overall economy, in real ( human ) terms it is huge. Observing life in the tourist areas, for every person working directly with tourists, whether bargirl or waiter, there are many more living on the periphery, eg laundry worker, hairdresser, beach hawkers etc etc, and any downturn in tourist numbers directly affects vast numbers of un(officially)counted Thai workers. IMO, the large increase in crime in Pattaya was caused by the decrease in tourist numbers, as many lost the means to make an "honest" living.

So, whether you believe that "tourism" is of such small size overall to be largely irrelevant, if numbers continue to decline it will, IMO, cause significant social problems.

Of course, all the present workers in tourism may just go back to the farm and do backbreaking work for a pittance, but then again they may not, and what will happen then?

[Gary A]

It was about 1993 when I decided Thailand was where I would eventually retire At that time the exchange rate was approximately 25 baht to a dollar. That is the rate that I based my retirement needs on. I didn't watch the GBP then, but for curiosity, I looked it up. The exchange rate in 1993 was approximately 38 baht to the GBP.

What makes anyone think that the rates won't go back to those figures? I like to think that I have had a very comfortable surplus all these years. I could have easily retired much earlier during the time of the baht collapse. I didn't because I thought the baht would eventually gain its strength back. Fortunately for me, the baht has not gone back back to 25 to a dollar but it could. Who can say if it will or not?

[xbusman]

I think you are right in the fact that tourism has a greater impact in employment than manufacturing and this has been studied. My recollection though, is that the impact is not as great as we assume. I dont remember the exact numbers but its something like for 7% of the GDP it employs some 9% of the work force. In addition, they do their best to capture the periphery employment but with all aggregate data its a little sketchy, particularly in Thailand where data collection is suspect to begin with.

One of the problems with tourism is that it is so visible to anecdotal observation, it is easily seen, takes up a huge amount of room, and advertises heavily. Manufacturing on the other hand, is hidden away and seldom if ever seen. One small manufacturing facility with 100 or so workers is able to bring in far more revenue than 50 bar beers with 500 workers. That usually raises the question of does the revenue stay in Thailand with the factory because we know it mostly does with the bar beers. Those are the kind of questions that economists love to debate at great length and which seem to me rather pointless. All the economic data is more abysmal science and I think the numbers should be taken as generalities and not facts. The trends seem more important than the status and for now the trend on the thai baht is to continue strengthening until something gives.

[thaibeachlovers]

It was about 1993 when I decided Thailand was where I would eventually retire At that time the exchange rate was approximately 25 baht to a dollar. That is the rate that I based my retirement needs on. I didn't watch the GBP then, but for curiosity, I looked it up. The exchange rate in 1993 was approximately 38 baht to the GBP.

What makes anyone think that the rates won't go back to those figures? I like to think that I have had a very comfortable surplus all these years. I could have easily retired much earlier during the time of the baht collapse. I didn't because I thought the baht would eventually gain its strength back. Fortunately for me, the baht has not gone back back to 25 to a dollar but it could. Who can say if it will or not?

To reiterate what I wrote before, the figures are meaningless. It's what a present pound or dollar can buy in Thailand that counts.

While I could have lived very comfortably in LOS back in '93 at 38 to 1 pound, now, with the prices of everything that I use having at least doubled, I could not afford to live long time in LOS at the same x rate.

I would point out that while the cost of everything has gone up significantly, due to British restrictions on public sector workers pay rises over the past 10 years, my income went down in purchasing power.

[lovelomsak]

The first part was good, and indeed too much is made of its foregn reserves and generallly strong short term position, too little made of all its problems. After that what you said was just a lot of hot air!

Before criticising minor points about the Thai economy, I think everyone should accept that the bar for being a decent economy is exceptionally low. I mean 'generally strong short term position might be appropriate in a world of disciplined and responsible economies but in terms of todays economies I think shall we say 'exceptionally strong short term position' is really more appropriate when you consider there is no particular underlying problems and an overall surplus (not many of those.)

And given all the crappy currencies around to refer to the Thai baht as the most overvalued currency in the world is really a bit much when you consider that many currencies are hardly worth the paper they are written on. To talk about Thailand not being competitive when it has a current account surplus and forex as a percentage of GDP bigger than China. To say that doesnt matter is fine but at least they didnt have to get bailed out by the Fed like the BoE. And I defy anyone to show anything other than the currency is undervalued on a PPP basis

And to say their fundamentals will deteriorate is almost certainly true because their currency will probably appreciate against the remains of the rubbish out there. The current account may only balance and the fiscal deficit might be 5% but although it will lose competitiveness it is hard to imagine it getting into the trouble of most countries out there.

And when we talk competitiveness it does generate US$180bn exports in a US$260bn economy

The Greek economy which is say US$350bn produces a grand total of US$29bn of exports with imports of US$94bn.Try working with those numbers and workout how it is even an economy.

Ultimately if you are genuinely honest it really difficult to think of a country that has done better than Thailand during the economic crisis. No bank collapse, surpluses, modest fiscal deficit etc. they didnt go about boosting lending by US$1trillion like China. And all the fifth world stuff is really a little much when the first world acted like banana republics. Because they dont have capital controls which allows China to constantly undervalue its exchange rate it is appreciating to its detriment. At least accept they have done a pretty good job during these difficult times and the way economics works (unless you are China) is that competitors who have more problems are made more competitive.

In the fourth quarter if you had measured economic growth in the same way as the US looks at it which QOQ annualized it was 15.3%. Somehow to not even acknowledge their success because you dont appreciate it while throwing meaningless misinformed criticism seems very tough especially set against all the crap out there.

Lovelomsak opening sentence was spot on, concise and clear.

Is this the sentence you are referring to?

Now I am no genius as anyone who reads my post must know by now. One of my main faults is seeing things from a different perspective than the crowd

If it is then Thank you It is nice to get respect for my insight.

[thaibeachlovers]

I think you are right in the fact that tourism has a greater impact in employment than manufacturing and this has been studied. My recollection though, is that the impact is not as great as we assume. I dont remember the exact numbers but its something like for 7% of the GDP it employs some 9% of the work force. In addition, they do their best to capture the periphery employment but with all aggregate data its a little sketchy, particularly in Thailand where data collection is suspect to begin with.

One of the problems with tourism is that it is so visible to anecdotal observation, it is easily seen, takes up a huge amount of room, and advertises heavily. Manufacturing on the other hand, is hidden away and seldom if ever seen. One small manufacturing facility with 100 or so workers is able to bring in far more revenue than 50 bar beers with 500 workers. That usually raises the question of does the revenue stay in Thailand with the factory because we know it mostly does with the bar beers. Those are the kind of questions that economists love to debate at great length and which seem to me rather pointless. All the economic data is more abysmal science and I think the numbers should be taken as generalities and not facts. The trends seem more important than the status and for now the trend on the thai baht is to continue strengthening until something gives.

While I do not disagree with what you say, I would point out that a bar girl who could expect to make enough with a few customer "assignations" to support many family members is contributing more to the local economy than a factory worker who will barely make enough to survive. However none of the family members are recognised in the compilation of official tourism statistics ( and her income is "off the books" ).

If all the peripheral workers, eg hawkers, shoe shine boys etc were reconised, then I'm sure tourism would be reconised as contributing a far greater income to the Thai economy than 7%.

With the increasing baht, it is precisely those "unseen" workers that will miss out, as who will pay for a shoe shine, when the hotel cost just went up 200 baht a day, and the forex just went down by 2 baht?

[pipchatel]

If a currency falls, it must fall against something else - because that's what exchange rates are all about.

Exactly, seems to be difficult to understand for some. I, on the other hand, have problems to understand why the Baht is still going so strong. The future of this country isn't looking too bright, is it?

Too true. these last few years watching Thai polotics and all thier troubles, still the baht has kept strong. It must be that they have ware houses full of Us $,Euros,pounds, and Gold too. Its certainly been depressing to see our pension money slipping away.

But i still think we can live well here in the LOS but with belt tighting for sure, just 1 beer a day

[abcz9]

Clothes like t-shirts & cheap day wear can be got in Uk much cheaper & better quality than Thailand.

Thailand is not nearly as cheap as people think imo.

yeh your right i go back to uk with no bag then buy a bag and buy shoes cloths also tools phones ect. much cheaper

[manjara]

Clothes like t-shirts & cheap day wear can be got in Uk much cheaper & better quality than Thailand.

Thailand is not nearly as cheap as people think imo.

yeh your right i go back to uk with no bag then buy a bag and buy shoes cloths also tools phones ect. much cheaper

Agree, if you buy the cheap stuff in Thailand, it really is c**p. However, buying a pair of Pierre Cardin shoes or similar is generally cheaper in Thailand than the UK, though if you go to the outlet malls in the UK, you can probably get similar deals.

I find that I don't spend much less in Thailand than I do in the UK, you can make choices to live cheaper in both places. In the UK, shop at Lidl, Iceland and Aldi once a week. In Thailand go to the markets and cook your own food or buy khwettiao twice a day. In the UK turn the thermostat down a degree, in Thailand turn it up a degree.

Some things are more expensive in the UK, like meat, vegetables, petrol, etc, but often the things we buy in Thailand thinking they are cheap are actually available in the UK for similar or cheaper prices if we shop around - it's just that we don't go to Poundstretcher in the UK!

Perhaps the real question is why we will quite happily buy cheap c**p here in Thailand, but not back home!?

My father does and he was telling me he got a nice pair of trousers back in the UK for 250 baht after I told him I got a pair of jeans for 300 baht

[mommysboy]

OK as the pounds so low and this is a Thai webste where there must be a fair few earning decent money in Thai Baht or other currencies, it would seem now is as good a time as any to invest in the UK, as im sure even the biggest pessimist must accept the UK will get out of this mess eventually.

All my sterling will be getting invested in nice boring safe investments in the UK shortly, not worth putting it into Euros, dollar or baht investments at present, wouldnt have thought im the only one thinking this way ... surely this will be to the benefit of the UK economy.

Well No! that is the thing here, there are a significant number of people who genuinely think the recession will never end, or a few others who think that the balance of power has shifted from Europe/N. America to Asia.

I think they are on a loser but there you go!

Fair play, but you seem to flood this forum with posts against the pound, can you confirm youve made a shed loads of money doing just this or is it just thoughts that come from reading and watching the same crap as us all that you get your visions from ... as if so i could have gone all against the pound 18 months ago by just stating the <deleted> obvious.

PS You make yourself look silly by saying this recession will never end ... then backtracking with you statement about the balance of power shifting, come on this has been shifting for a good few years now, even during the boom of the last 12 years ... the free thinkers cant take credit for this!

UH! WRONG PERSON WRONG THREAD. WHAT A TWIT!

[whichschool]

^^^

Ive quoted what youve said responded to it, then asked you to elaborate ... isnt that what youre meant to do on forums?

[mommysboy]

^^^

Ive quoted what youve said responded to it, then asked you to elaborate ... isnt that what youre meant to do on forums?

Err! I was defending the pound, and saying those that thought the recession would not end were wrong. Bad case of friendly fire! Are you being sponsored by Bagwan?

[whichschool]

Apologies a misunderstanding, but if you read your thread it is easily misinterpreted that youre one of the people who think the UK wont be coming out of recession.

In that you highlight when i said "sure even the biggest pessimist must accept the UK will get out of recession" , then start your respnse with "Well no".

Im working in Saudi, with Saudis, Indians, Philipinos and Indonesians and my view is if this is the competition then Western countries will always be top of the shop, though with the vile property boom of the last 10 years to pay for, it will take a good few years to get out of this prediciment.

I think when the Tories are in Power in May there will be a rebound in the Pound, and one way or another theyll get back into power as no party in a hung parliament is going to get into bed with the Labour Party as this would be political suicide for them ... The Lib Dems said this a few years ago - http://www.guardian.co.uk/politics/2009/ja...beral-democrats edited correct link

Vince Cable as chancellor would be a result!

Edited March 11, 2010 by whichschool

[mommysboy]

Apologies a misunderstanding, but if you read your thread it is easily misinterpreted that youre one of the people who think the UK wont be coming out of recession.

In that you highlight when i said "sure even the biggest pessimist must accept the UK will get out of recession" , then start your respnse with "Well no".

Im working in Saudi, with Saudis, Indians, Philipinos and Indonesians and my view is if this is the competition then Western countries will always be top of the shop, though with the vile property boom of the last 10 years to pay for, it will take a good few years to get out of this prediciment.

I think when the Tories are in Power in May there will be a rebound in the Pound, and one way or another theyll get back into power as no party in a hung parliament is going to get into bed with the Labour Party as this would be political suicide for them ... The Lib Dems said this a few years ago - http://www.guardian.co.uk/politics/2009/ja...beral-democrats edited correct link

Vince Cable as chancellor would be a result!

LOL. It doesn't matter.

No I was saying that incredibly there are people on this forum who genuinely believe that this is the end of the road for the UK. They are mad IMHO.

I'm guessing that Labour will return to power as there is no credible opposition.

Whoever gets in power will have too embark on a major cost cutting exercise as devaluation is creating profit but not generating an increase in GDP, that is so sorely needed to generate enough tax.

[whichschool]

Not the end of the road by a long stretch one reason is that the brains of the world for some reason want to come to British universities, now if they start making efforts to keep these people there instead of being desperate for lowskilled East Europeans, Africans and Pakistanis this would be one small step to get back on their feet.

Im out of England for a good few years and very possibly forever, though any pounds im making at present will be spent on buying some overpriced land back there just incase things ever go tits up for me, so long as land values go down its more important then the baht for me at present.

Whilst it hurts a little paying a bit extra for a few beers and a plate of lasagna in LOS and the occasional barfine it isnt going to bankrupt me, but its just another reason not to invest in LOS.

As for Labour getting back in, i just cant see how that can be possible despite Dave and his Oxbridge buddies being useless ... 5 more years of Gordon would be a disaster of immense proportions for Sterling as he's been found out by the markets as being a total charlatan.

Edited March 11, 2010 by whichschool

[lovelomsak]

I apologize for not being Birtish and being a simple man from the british colony of Canada. But I would appreaiate the opportunity to say something about the economic future. The 21 century will see asia taking the economic power away from us caucasians. The pound the euro and the dollar will drop in value and stay there.Tighten your seatbelts boys it has just began. It amazes me how all the caucasians still believe they understand what is going on here. The more I read the I realize many arenot analizing the situation for what it is but for how it should work out for their own interests. Self serving interests will only succeed when you realize the situation and stop denying it. Accept the fact that Thailand and Asia know something maybe you donot know.

[Scott]

I think the future belongs to countries (and companies) that are innovative, creative and inventive. Thus far, haven't seen a lot of that in Asia. As it now stands, Asia still needs to export to somewhere; that somewhere is western countries.

[chiang mai]

For the second time in a week I find I can actually agree with lovelomsak again and even more strangely, I even agree with MMB's last post, it must be the weather!

I think there's a huge risk in the UK presently that Labour will be returned to power and that it will be five more years of the same, if not worse than the same, and that must surely be the final nails in the UK coffin. The problem is that there is now a large swathe of the UK population that has a vested interest in seeing Labour returned to power and an even bigger slice who simply don't care which party governs - those on state handouts and benefits will certainly not want to see the Tories in power because such a move will end their easy lifestyle whilst generation Y thinks of the Tories as a privileged elite class that will stifle their advancement. It's all going to be very sad. And for those of you who think such a thing could never happen I would point to the election and then re-election of GWB, nobody in the thinking world thought that might ever happen!

[mommysboy]

For the second time in a week I find I can actually agree with lovelomsak again and even more strangely, I even agree with MMB's last post, it must be the weather!

I think there's a huge risk in the UK presently that Labour will be returned to power and that it will be five more years of the same, if not worse than the same, and that must surely be the final nails in the UK coffin. The problem is that there is now a large swathe of the UK population that has a vested interest in seeing Labour returned to power and an even bigger slice who simply don't care which party governs - those on state handouts and benefits will certainly not want to see the Tories in power because such a move will end their easy lifestyle whilst generation Y thinks of the Tories as a privileged elite class that will stifle their advancement. It's all going to be very sad. And for those of you who think such a thing could never happen I would point to the election and then re-election of GWB, nobody in the thinking world thought that might ever happen!

Five more years of the same?

Do you really believe that?

And do you really believe that UK will never recover?

No whoever gets in power will freeze/ or cut, and the best guess is the housing market and financial sectors will get clobbered as that's where the most blameworthy lie!

When the average house falls to around 120000 (being 3.5 times main plus additional) then it may be deemed that a point of sanity has been restored.

[theoldgit]

When the average house falls to around 120000 (being 3.5 times main plus additional) then it may be deemed that a point of sanity has been restored.

You may well be right though I suppose those stuck with high mortgages on their inflated properties probably wouldn't agree, so would would happen to the economy when there are large numbers defaulting on their loans?

[HardenedSoul]

I think the future belongs to countries (and companies) that are innovative, creative and inventive. Thus far, haven't seen a lot of that in Asia. As it now stands, Asia still needs to export to somewhere; that somewhere is western countries.

China has just spent the best part of $580bn building its own domestic consumer demographic by getting the ordinary man in the street hooked on credit. It's the quickest of quick fixes for sure but it's working like a dream so far.

Having said that, though, there is sense in what you say insofar as the future for Western economies lies in the protection of their intellectual property rights. It's disingenuous of Western governments to suggest that recovery lies in competing with Asian countries on production and labour costs. No one in Blighty's gonna work in a factory for the same money as a Thai or a Vietnamese. . . . unless, of course, they were willing to accept an almighty fall in their living standards.

Give up SkyHD ??!!! They'd sooner die !

Edited March 12, 2010 by HardenedSoul

[seasider]

For the second time in a week I find I can actually agree with lovelomsak again and even more strangely, I even agree with MMB's last post, it must be the weather!

I think there's a huge risk in the UK presently that Labour will be returned to power and that it will be five more years of the same, if not worse than the same, and that must surely be the final nails in the UK coffin.[/b] The problem is that there is now a large swathe of the UK population that has a vested interest in seeing Labour returned to power and an even bigger slice who simply don't care which party governs - those on state handouts and benefits will certainly not want to see the Tories in power because such a move will end their easy lifestyle whilst generation Y thinks of the Tories as a privileged elite class that will stifle their advancement. It's all going to be very sad. And for those of you who think such a thing could never happen I would point to the election and then re-election of GWB, nobody in the thinking world thought that might ever happen!

The thing that struck me was that in the aftermath of all this, the opinion polls had labour only 5 % behind the Tories, which i found unbelievable. I then camwe to the same reasoning as you, quite simply everybody on benefits or low incomes and most 1st or 2nd generation immigrants will still support labour, it's in their best interests.

[mommysboy]

When the average house falls to around 120000 (being 3.5 times main plus additional) then it may be deemed that a point of sanity has been restored.

You may well be right though I suppose those stuck with high mortgages on their inflated properties probably wouldn't agree, so would would happen to the economy when there are large numbers defaulting on their loans?

It's not about what is agreeable or disagreeable, or what might happen as a consequence, it's more about fundamentals and reality.

Plenty of people rode negative equity in the 80's and it strikes me that quite a few million could learn a lesson in thrift. Moreover, I rather suspect it will be more about pay freezes and stagnation more than severe drops.

Unlike other posters I believe Brits have the mettle to endure and come through.

Either way. I (and I suspect many others) don't want to be held ransom by a bunch cocaine addicted serious oence fraudsters, or a bunch of weak willed idiots who borrowed too much.

Regarding the political situation, as a natural Labour supporter I can't comment with impartiality. But as a patriot and moderate, well yes who on earth wants to vote for a party that would blame them and let the real villains off the hook?

[roamer]

In 1995 I waited 7 months to see a consultant about a back problem, I was then told it would most likely be at least another 12 months before I could have an operation. I actually ended up having it done privately in Malaysia. A few months ago my niece had a similar problem, said that she was prepared to go to any hospital within traveling distance for an MRI scan, received one 10 days later, saw her consultant just 10 days after that and was scheduled for treatment the following week.

The NHS might not be perfect now, a long way from it but I hate to think how it would be if the Tories had continued to squeeze it like a lemon.

That's one of the reasons why I will vote Labour. I doubt if I will be standing in a queue alongside chavs and benefit scroungers as they tend not to vote anyway. The myth that the Tories will crack down on immigration and put workshy Brits back to work is simply that, a myth. Their backers such as the CBI and Institute of Directors are on record numerous times as stating that immigrant workers are needed to fill the vacancies in the factories, fields and hospitals up and down the land. Tracey ain't going to go out and start pushing a mop around hospital floors, Jason would still be too stoned from last nights skunk to stand at an assembly belt. Take away their benefits and you'll just up the mugging rate quite spectacularly.

The problems are in society as a whole and sadly with our form of adversarial point-scoring political system we are never going to get to grips with it.

[Chaimai]

It's not about what is agreeable or disagreeable, or what might happen as a consequence, it's more about fundamentals and reality.

Plenty of people rode negative equity in the 80's and it strikes me that quite a few million could learn a lesson in thrift. Moreover, I rather suspect it will be more about pay freezes and stagnation more than severe drops.

Unlike other posters I believe Brits have the mettle to endure and come through.

Once again I find myself agreeing with mmb (I have no problem with that).

I live in that world of fundamentals and reality as I spend 3 to 4 months a year in the UK. I have business and property interests.

It has been a sh!t time, no one can dispute that. Other threads cover the fact that the recession was almost entirely due NOT to the actions of the man in the street, NOT even local bank or Northern Rock manager, but to the actions of so called "institutions" gambling in derivatives.

The reality is that the man in the street (and the local bank manager once his head office takes their thumbs out of their respective ar5es) is the one who will work their way out of this recession. Will it happen ? Of course it will. It is already happening. Choose a measure - unemployment ? consumer spending ? property demand ? property prices ?

I can only speak for my area but there are very few people who want to work who can't get work. Most tradesmen in the building sector have had varying degrees of work but most say things are getting better. As a consequence local retailers are seeing an uplift in revenues and 2 new shops have opened in the last fortnight. All local agents report an increase in activity both for rented property and purchases. New properties are coming onto the market which suggests an increased confidence on the part of vendors, partly seasonal I accept. There are very, very few fire sales.

The agents I have spoken to think that the market has recovered to circa 10% of pre-recession values. We have seen one case of gazumping in the last month !

Whether 12Drinkmore likes it or not the UK is such a property based economy and only when recovery happens in this sector will there be a knock-on effect to other areas.

Remember as well that anybody with a salary of, say, £40,000 pre-recession is still earning that salary. It is likely that their expenditure has dropped significantly as a result of the artificially low interest rates. One of my mortgage payments dropped from £800+ to £103. (Just as well because my income dropped by more than that !).

What will this do for exchange rates ?

Eventually, if my scenario plays out, it will reduce the international negativity towards Sterling and ease speculative pressure (which in my view is unfounded and the sooner that other speculators like Soros <deleted> off the better - it is these gamblers that create nothing and have the potential to destroy everything).

Edited March 12, 2010 by Chaimai

[HardenedSoul]

Eventually, if my scenario plays out, it will reduce the international negativity towards Sterling and ease speculative pressure (which in my view is unfounded and the sooner that other speculators like Soros <deleted> off the better - it is these gamblers that create nothing and have the potential to destroy everything).

Remember as well that anybody with a salary of, say, £40,000 pre-recession is still earning that salary. It is likely that their expenditure has dropped significantly as a result of the artificially low interest rates. One of my mortgage payments dropped from £800+ to £103. (Just as well because my income dropped by more than that !).

Don't hate the player; hate the game !

George Soros gives hundreds of millions to charitable causes so don't be too hard on him.

As for your assertion on the subject of expenditure, you're correct but only up to a point. By and large, if you've kept your job and not had a pay cut in the UK, you've had a pretty sweet recession. A conversation with someone in his situation might go like this:

Your mortgage payments have dived and you've got more disposable income as a result, right ??

Yep

This means you've bought more "stuff", right ??

Nope. I've been - wait for it - paying . . . down . . . debt !!

This trend will continue . . . right up until the bond markets put interest rates up for us. Think about it, all those homeowners who went out and got moody payslips or dodgy P60s to inflate their incomes. All those jokers who strapped themselves with secured loans up to 95% loan-to value from Ocean Finance to consolidate credit cards and the loan for the Audi TT.

If these people are holding on by the skin of their teeth with base rates at 0.5%, what in God's name are they gonna do when rates go up ? They can't remortgage cos the criteria's changed - no more self-certification, no more non-status, no more moody payslips or P60s and, furthermore, even if those things could still get past underwriters, the value of their properties have fallen so they're underwater.

As soon as rates go up - which they will - the sheer number of properties hitting the market will make the late 80s/early90s look like a tea party. You've got the HardenedSoul personal guarantee on that !! Lenders don't mess about when it comes to selling off repossessed stock - I remember looking at 2 bed flats in Maida Vale being sold at £55,000 in 1994/5

There may be more disposable income floating about foo those with well paid jobs but they ain't spending as the retail figures show. Trust that this party was over in early 2007 and that the hangover's just getting started.

Edited March 12, 2010 by HardenedSoul

[roamer]

Eventually, if my scenario plays out, it will reduce the international negativity towards Sterling and ease speculative pressure (which in my view is unfounded and the sooner that other speculators like Soros <deleted> off the better - it is these gamblers that create nothing and have the potential to destroy everything).

Remember as well that anybody with a salary of, say, £40,000 pre-recession is still earning that salary. It is likely that their expenditure has dropped significantly as a result of the artificially low interest rates. One of my mortgage payments dropped from £800+ to £103. (Just as well because my income dropped by more than that !).

Don't hate the player; hate the game !

George Soros gives hundreds of millions to charitable causes so don't be too hard on him.

As for your assertion on the subject of expenditure, you're correct but only up to a point. By and large, if you've kept your job and not had a pay cut in the UK, you've had a pretty sweet recession. A conversation with someone in his situation might go like this:

Your mortgage payments have dived and you've got more disposable income as a result, right ??

Yep

This means you've bought more "stuff", right ??

Nope. I've been - wait for it - paying . . . down . . . debt !!

This trend will continue . . . right up until the bond markets put interest rates up for us. Think about it, all those homeowners who went out and got moody payslips or dodgy P60s to inflate their incomes. All those jokers who strapped themselves with secured loans up to 95% loan-to value from Ocean Finance to consolidate credit cards and the loan for the Audi TT.

If these people are holding on by the skin of their teeth with base rates at 0.5%, what in God's name are they gonna do when rates go up ? They can't remortgage cos the criteria's changed - no more self-certification, no more non-status, no more moody payslips or P60s and, furthermore, even if those things could still get past underwriters, the value of their properties have fallen so they're underwater.

As soon as rates go up - which they will - the sheer number of properties hitting the market will make the late 80s/early90s look like a tea party. You've got the HardenedSoul personal guarantee on that !! Lenders don't mess about when it comes to selling off repossessed stock - I remember looking at 2 bed flats in Maida Vale being sold at £55,000 in 1994/5

There may be more disposable income floating about foo those with well paid jobs but they ain't spending as the retail figures show. Trust that this party was over in early 2007 and that the hangover's just getting started.

So true. I know a building society manager who says her big concern is that she says there are more than a few of her customers who were previously having problems meeting their mortgage payments and will have little chance of doing so when interest rates rise. Her bigger concern was the amount of buy-to-let landlords that primarily thought of it as an investment and will simply walk away when they see that the values are not going the way they thought.